Tissue interfaces are essential for development and their disruption often leads to diseases such as tumor invasion. Here, we combine experiments, theoretical modeling, and numerical simulations to quantify the morphodynamics of interface in a biphasic system composed of Madin Darby canine kidney (MDCK) and mouse myoblast (C2C12) cells. We show that cellular activity regulates the interface morphodynamics and drives wave propagation along the interface. Based on the dispersion relationship, we identify that the wave dynamics results from the activity-mediated instability of the interface and coherent flow. It is found that the topological defects accumulate around and destabilize the interface and +1/2 topological defects are more likely to aggregate in MDCK cell clusters. A biphasic active nematic theory is employed to reproduce our experimental observations and decipher the underlying mechanisms. These findings provide physical insights into the interfacial evolution that could be implicated in tissue morphogenesis and tumor invasion.